Raul Castro took over from his brother Fidel Castro as Cuban president on Sunday, ending the rule of the bearded rebel who defied the United States for five decades but vowing to continue his communist revolution.

A former hardliner who is feared for his ruthlessness but has adopted a softer tone in recent years, Raul Castro, 76, nodded and smiled as legislators applauded his selection by the rubber-stamp National Assembly.

He is expected to pursue limited economic reforms but in a sign that change is unlikely to be deep or abrupt, Communist Party ideologue Jose Ramon Machado Ventura was named first vice president, or Cuba's No. 2.

In his first speech as president, Raul Castro said he would continue to consult his older brother on important issues.

"The mandate of this legislature is clear ... to continue strengthening the revolution at a historic moment," he said.

Fidel Castro, 81, stepped down on Tuesday because of ill health, ending his long rule of the West's last communist state.

He overthrew US-backed dictator Fulgencio Batista in a 1959 revolution and then survived assassination attempts, a CIA-backed invasion, the Soviet Union's collapse and a US economic embargo to rule for almost half a century.

Raul Castro said he was accepting the job on the condition that his brother continued to be the "commander in chief of the revolution" -- a title created for him during his guerrilla uprising before seizing power in a 1959 revolution.

"Fidel is Fidel. Fidel is irreplaceable."    

Raul Castro lacks the oratorical flair of his brother, but he has encouraged ordinary Cubans in the last 19 months to air concerns over the economy, raising hopes of modest reforms.

The US government has dubbed Raul Castro "Fidel Lite" and dismisses the leadership change as the handing of power from one dictator to another.

"If you look at the nature of the people in charge, this is the Old Guard, it's the hard line and there is no reason for us to feel a sense from optimism for the Cuban people," US Commerce Secretary Carlos Gutierrez told Reuters on Sunday.

The appointment of Machado Ventura, a member of Raul Castro's inner circle, suggested that change would be subtle.

"This is about signaling continuity externally and internally," said Julia Sweig, an expert on Cuba at the Council on Foreign Relations think tank in Washington, although she said Cuba's leaders are well aware they need to address food shortages and other problems.

"Raul is really a pragmatist and for all of them the clock on bread and butter issues starts ticking now. It's a mistake to think there's an enormous amount of light between any of these people. They're all basically headed in the same direction, with some nuances," she said.

In the ramshackle streets of old Havana, some residents huddled around radios on Sunday but others, more concerned with coping with day-to-day shortages and challenges than with politics, went about their daily business, shopping for fruit and vegetables or playing dominoes on the sidewalk.

"With Raul, people hope the economy will improve. It won't happen quickly but maybe within 10 years the economy could stabilize," said Jorge, 42, an electrician who asked not to be fully identified.

Cuban exiles in Miami, the heartland of opposition to the Castro brothers, were not surprised at the appointments.

"It's once more depriving the Cuban people of choosing their destiny," said Ninoska Perez of the Cuban Liberty Council, a hardline anti-Castro group.

Raul Castro has led Cuba since July 2006 when his brother temporarily handed over power after intestinal surgery.

A leftist icon in his army fatigues, cap and beard but oppressor of his people to his enemies, Fidel Castro officially retired on Tuesday, reduced by illness to a shuffling old man.

He has not been seen in pu